Title agents must file a report even if they have no money to escheat!
Q: Are holders required to file a “negative report”?
A: Yes, all holders that have no property to report, must file a none report each year by April 15th.
Read more FAQs on the Treasury web site.
Friday, April 09, 2010
Wednesday, April 07, 2010
what about these title agents who fail to issue policies, eh?
Hi Diane,
I came across your blog sometime last year and really enjoy reading it as it helps to understand what goes on in the world of title. I recently began job in the mortgage industry. This company grew fast and could not keep up the pace of processing the incoming final documents (recorded mortgage and title policy) so I was hired to get the company back on track. After clearing out bins and bins of final docs I noticed a trend. We had not received all of our final document for closing that closed earlier that year. We began to send out letters and emails and found that quite a few title policies simply had not been processed or were "in line" to be processed. Its like if we had not asked for it then we wouldn't have gotten it. Some agents went out of business and now were having to deal with the underwriter of the policy and that's another mess and our investors are giving us deadlines on these final docs so its just one big mess. I'm loosing patience with these agencies. The closing instructions clearly state the delivery date for these docs (which is usually 120 days from closing). I guess my question is, Whats the best way to handle these agents that don't perform on the back end? Everyone is eager to close loans and get paid but the work isn't finished till the policy is issued I feel.
-Frank
Hi, Frank: A title agent who does not promptly issue a policy is not trustworthy and I would take them off the approved list. I think a well worded letter to title agencies that says failure to perform will result in being taken off the approved list will get results. It's a moving forward plan but it will be effective.
On the other hand, we issue short form loan policies which are delivered with the documents immediately following closing. Since most lenders aren't used to immediate delivery, they often overlook the policy and come back to us for duplicates. We issue lots and lots of duplicate copies of loan policies because the original isn't noticed in the up front package. It is possible that this might be a small part of the problem and a decision to require "short form" policies coupled with a good system to check for them in the original document delivery package will eliminate the [future] post closing backlog.
If you have your policy in hand, getting recorded docs isn't as much of an issue because when an agency goes out of business, you can always just get a recorded doc from the courthouse. If for some reason the documents weren't recorded, you have the policy in hand which along with a CSL or CPL will compel the title underwriter to come to your rescue.
Good luck and let me know how it works out, okay?
Diane
I came across your blog sometime last year and really enjoy reading it as it helps to understand what goes on in the world of title. I recently began job in the mortgage industry. This company grew fast and could not keep up the pace of processing the incoming final documents (recorded mortgage and title policy) so I was hired to get the company back on track. After clearing out bins and bins of final docs I noticed a trend. We had not received all of our final document for closing that closed earlier that year. We began to send out letters and emails and found that quite a few title policies simply had not been processed or were "in line" to be processed. Its like if we had not asked for it then we wouldn't have gotten it. Some agents went out of business and now were having to deal with the underwriter of the policy and that's another mess and our investors are giving us deadlines on these final docs so its just one big mess. I'm loosing patience with these agencies. The closing instructions clearly state the delivery date for these docs (which is usually 120 days from closing). I guess my question is, Whats the best way to handle these agents that don't perform on the back end? Everyone is eager to close loans and get paid but the work isn't finished till the policy is issued I feel.
-Frank
Hi, Frank: A title agent who does not promptly issue a policy is not trustworthy and I would take them off the approved list. I think a well worded letter to title agencies that says failure to perform will result in being taken off the approved list will get results. It's a moving forward plan but it will be effective.
On the other hand, we issue short form loan policies which are delivered with the documents immediately following closing. Since most lenders aren't used to immediate delivery, they often overlook the policy and come back to us for duplicates. We issue lots and lots of duplicate copies of loan policies because the original isn't noticed in the up front package. It is possible that this might be a small part of the problem and a decision to require "short form" policies coupled with a good system to check for them in the original document delivery package will eliminate the [future] post closing backlog.
If you have your policy in hand, getting recorded docs isn't as much of an issue because when an agency goes out of business, you can always just get a recorded doc from the courthouse. If for some reason the documents weren't recorded, you have the policy in hand which along with a CSL or CPL will compel the title underwriter to come to your rescue.
Good luck and let me know how it works out, okay?
Diane
Tuesday, April 06, 2010
query: I have been pre-approved and have received a Good Faith Estimate, does that mean I am approved?
No. Receipt of the Good Faith Estimate is the first step in selecting a lender. The question on the table right now is - are YOU satisfied with the terms offered by the mortgage lender?
Your job right now is to speak with a few lenders and compare Good Faith Estimates. Lenders cannot charge you for that pre-approval or Good Faith Estimate so move fast, make your decision - choose a lender.
Whichever lender you select will take you through a verification and approval process normally lasting 4 weeks. They must obtain an appraisal, verify your credit, assets and income and then submit your file to a mortgage underwriter for formal approval. You will know you are approved when you received a document called a COMMITMENT LETTER. Read it carefully because there may be conditions. YOU are responsible for meeting any conditions. Work closely with your loan officer and respond to any request to make sure your transaction moves forward.
Your job right now is to speak with a few lenders and compare Good Faith Estimates. Lenders cannot charge you for that pre-approval or Good Faith Estimate so move fast, make your decision - choose a lender.
Whichever lender you select will take you through a verification and approval process normally lasting 4 weeks. They must obtain an appraisal, verify your credit, assets and income and then submit your file to a mortgage underwriter for formal approval. You will know you are approved when you received a document called a COMMITMENT LETTER. Read it carefully because there may be conditions. YOU are responsible for meeting any conditions. Work closely with your loan officer and respond to any request to make sure your transaction moves forward.
Saturday, April 03, 2010
on the PA Data Call
It just hit me. The reason PLTA and members are outraged over the PA Data Call is that they don't keep good records. DUH! That means they don't keep track of cancelled transactions and that HAS to be why they aren't outraged about the loss of thousands and thousands of dollars.
HEY TITLE AGENTS!!! Start a spreadsheet for dead deals. Live and learn, baby. Start counting the thousands -THOUSANDS - of dollars you lose every year because our industry is too frightened to collect cancellation fees.
Yoi. Double yoi. ;)
HEY TITLE AGENTS!!! Start a spreadsheet for dead deals. Live and learn, baby. Start counting the thousands -THOUSANDS - of dollars you lose every year because our industry is too frightened to collect cancellation fees.
Yoi. Double yoi. ;)
wasted money and manhours
If PLTA and the various commenting members would get as outraged over wasted money and manhours spent processing cancelled title transactions as they got over the PA Data Call, we'd make some headway.
I'll likely go to my grave still wondering why our industry places little or no value on its prime work product. I am proud of our work. It has value. I kills me to be forced to give it away in fear. Yesterday I fielded a call from a consumer who casually cancelled a transaction because the property has termites. We paid roughly $300 out of pocket plus significant manhours including clerical and expert services. We examined title, resolved problems, prepped documents and were ready to close.
Outsiders just don't understand how often this happens. People think we work on a commission. If the deal doesn't close, we shouldn't get paid. This is not a commission business. We are paid for service rendered and to cover risk. If a transaction doesn't close, well then the services we render are fewer and we haven't taken on insurance risk, so we shouldn't receive our entire compensation. We have, however performed numerous pre-closing services for which we justly ought to be paid. The most outrageous cancellations are the ones in which we identify a title problem which cannot be resolved. We have done our job and protected the lender and the prospective buyer and if the deal falls thru we don't get paid. Doesn't anyone see the conflict that creates for title agents?
Trust me. Any long time reader of this blog knows I have run the gauntlet of charging fees and taking people to court, etc. etc. etc. until I finally realized I was committing agency suicide. Since our trade associations aren't out there leading us on the right path, I walked that walk alone and we suffered for it.
We have to support the industry together. We need leaders who understand. We need leaders who are not afraid.
The law is on our side. All we have to do is step up to the plate.
I'll likely go to my grave still wondering why our industry places little or no value on its prime work product. I am proud of our work. It has value. I kills me to be forced to give it away in fear. Yesterday I fielded a call from a consumer who casually cancelled a transaction because the property has termites. We paid roughly $300 out of pocket plus significant manhours including clerical and expert services. We examined title, resolved problems, prepped documents and were ready to close.
Outsiders just don't understand how often this happens. People think we work on a commission. If the deal doesn't close, we shouldn't get paid. This is not a commission business. We are paid for service rendered and to cover risk. If a transaction doesn't close, well then the services we render are fewer and we haven't taken on insurance risk, so we shouldn't receive our entire compensation. We have, however performed numerous pre-closing services for which we justly ought to be paid. The most outrageous cancellations are the ones in which we identify a title problem which cannot be resolved. We have done our job and protected the lender and the prospective buyer and if the deal falls thru we don't get paid. Doesn't anyone see the conflict that creates for title agents?
Trust me. Any long time reader of this blog knows I have run the gauntlet of charging fees and taking people to court, etc. etc. etc. until I finally realized I was committing agency suicide. Since our trade associations aren't out there leading us on the right path, I walked that walk alone and we suffered for it.
We have to support the industry together. We need leaders who understand. We need leaders who are not afraid.
The law is on our side. All we have to do is step up to the plate.
Friday, April 02, 2010
Well, I am impressed.
Anne Anastasi did call back after receiving my message concerning cancellation fees. She noted that we do have a specific statute in Pennsylvania and wondered how we could address this nationally. Here's our PA rule:
§ 125.2. Charges required for title reports and others.
If we were to charge the rate for a minimum title insurance policy, that would be $420 which, in my view reflects the value of our pre-closing work product in most cases.
We also have TIRBOP rules stating that we SHALL charge a cancellation fee AND the PAR sales agreement includes language stating that the buyer agrees to pay a cancellation fee in TWO places in the sales contract.
With all that muscle, you'd think we could accomplish something, right? Well, it takes leadership. Our trade associations, both PLTA and ALTA need to step up to the plate and lead the way.
We also have TIRBOP rules stating that we SHALL charge a cancellation fee AND the PAR sales agreement includes language stating that the buyer agrees to pay a cancellation fee in TWO places in the sales contract.
With all that muscle, you'd think we could accomplish something, right? Well, it takes leadership. Our trade associations, both PLTA and ALTA need to step up to the plate and lead the way.
After recently receiving short shrift from ALTA's Mike Pryor at a PLTI RESPA seminar and several years ago when I submitted an article to ALTA on the subject, I would be pleasantly surprised if ALTA stepped into a leadership role and recognized the work product of its membership as having value and not being afraid of retribution from lenders and Realtors.
We'll see. Change is the norm and sometimes things change in the right direction. ;)
Thursday, April 01, 2010
ALTA asking for membership
As part of what I guess is a routine membership drive, I received a voice mail from the soon-to-be president of ALTA noting that I had previously been a member and would I consider rejoining?
Yes, I used to pay over $2000 per year for the privilege of ALTA membership. I stopped paying $2000+ per year when I suddenly realized that ALTA was advocating against my interests and not for them. DUH!
ALTA has in recent years been a strong advocate for closely held affiliated or joint venture relationships. ALTA has also been an advocate for automated title search and examination, even though testimony at the state and federal level would have you think otherwise.
I have to give ALTA some credit for rethinking the role of expert human examination and perhaps they have backed off the joint venture bandwagon. That's not enough for me.
I lose thousands of dollars every year paying for abstracts and lien letters on cancelled transactions. In an average year make that around TEN thousands. In a boom year, make it around TWENTY-FIVE thousands, so when I have repeatedly asked ALTA to advocate on behalf of the interests of title insurance agents like me and convince the real estate and lending community that our pre-closing work product has value and ALTA says NO, well, I don't see my $2000+ membership dues going into their pocket anytime soon. Do you?
Yes, I used to pay over $2000 per year for the privilege of ALTA membership. I stopped paying $2000+ per year when I suddenly realized that ALTA was advocating against my interests and not for them. DUH!
ALTA has in recent years been a strong advocate for closely held affiliated or joint venture relationships. ALTA has also been an advocate for automated title search and examination, even though testimony at the state and federal level would have you think otherwise.
I have to give ALTA some credit for rethinking the role of expert human examination and perhaps they have backed off the joint venture bandwagon. That's not enough for me.
I lose thousands of dollars every year paying for abstracts and lien letters on cancelled transactions. In an average year make that around TEN thousands. In a boom year, make it around TWENTY-FIVE thousands, so when I have repeatedly asked ALTA to advocate on behalf of the interests of title insurance agents like me and convince the real estate and lending community that our pre-closing work product has value and ALTA says NO, well, I don't see my $2000+ membership dues going into their pocket anytime soon. Do you?
PLTA responds to the PA Department of Insurance on the data call
LETTER
Interestingly, we have paid for voluntary annual CPA audits and maintained spreadsheets for issued policies and cancelled transactions so we're able to give reasonably accurate data for everything accept the geographic breakdown. For that, we are randomly reviewing scanned files for these years, as many as we can and will do a guesstimate based upon an extrapolation of the sampling. We're giving three man hours to this task each day. I think that is reasonable.
Maybe it's because my staff and I mostly used to be lenders and bankers that we have fairly well organized systems of storage and access to data. We've been through audits for the entirety of our careers, usually with little or no notice. Funny, it never occurred to us NOT to keep track of most of what we do.
Interestingly, we have paid for voluntary annual CPA audits and maintained spreadsheets for issued policies and cancelled transactions so we're able to give reasonably accurate data for everything accept the geographic breakdown. For that, we are randomly reviewing scanned files for these years, as many as we can and will do a guesstimate based upon an extrapolation of the sampling. We're giving three man hours to this task each day. I think that is reasonable.
Maybe it's because my staff and I mostly used to be lenders and bankers that we have fairly well organized systems of storage and access to data. We've been through audits for the entirety of our careers, usually with little or no notice. Funny, it never occurred to us NOT to keep track of most of what we do.
to be or not to be "on the list" --------- RESPA 2010
We do lots of closings for lots of different lenders. Sometimes we are "on the list" and sometimes we're not. By "on the list" I am referring to the Provider List given to a borrower with the new GFE. When a lender gives a borrower the name of a title service provider, they have to put the provider on the list. This is a referral and when the lender gives a name to a borrower and also gives the borrower a GFE, the lender should be familiar with the fees charged by that provider, and so the rule requires that the figures on the GFE must be subject to the 10% tolerance test. Now, if the borrower goes out and selects a title service provider who was not mentioned by the lender and is not on the list, the lender can't be expected to give any guarantee of pricing.
When we prep the HUD-1, our software prompts us to indicate whether or not we are on the list. If we ARE, then our title services fees are a part of the 10% tolerance calculation. If we are NOT, then our fees are not part of the tolerance.
For the most part, everyone has been on the same page and in the few instances where we have found an intolerance, the lender has done an immediate cure.
Yesterday we had an interesting FIRST. We alerted the lender to an intolerance. The lender's response was that it wasn't a problem because they had over quoted title services and that covered the difference.
The lender did not have our company on the list. Our fees were significantly lower than those quoted on the GFE, however since we were not "on the list" our fees could not be used to offset an under quote of another fee.
We had a bit of a back and forth and asked the lender to take a close look at the RESPA FAQs pages 12-14, with a special emphasis on page 14.
Turns out their compliance team had given them incorrect direction. The supervisor cured the intolerance, thanked us for the help and said they would escalate this up the chain so company policy could be corrected.
If you are in a position prepping HUD-1 forms, please make sure you have read the RESPA FAQs and don't be shy about sharing information with your lender. We always do this in a way that demonstrates we are all on a learning curve. By having discussions about compliance, using the FAQs as a guide, we have often been able to think through scenarios and work out situations together as they are discovered. We are learning from lenders and visa versa. The point is that we should be able to understand clearly what we, lenders and title insurers, are doing and why rather than just taking direction mindlessly.
When we prep the HUD-1, our software prompts us to indicate whether or not we are on the list. If we ARE, then our title services fees are a part of the 10% tolerance calculation. If we are NOT, then our fees are not part of the tolerance.
For the most part, everyone has been on the same page and in the few instances where we have found an intolerance, the lender has done an immediate cure.
Yesterday we had an interesting FIRST. We alerted the lender to an intolerance. The lender's response was that it wasn't a problem because they had over quoted title services and that covered the difference.
The lender did not have our company on the list. Our fees were significantly lower than those quoted on the GFE, however since we were not "on the list" our fees could not be used to offset an under quote of another fee.
We had a bit of a back and forth and asked the lender to take a close look at the RESPA FAQs pages 12-14, with a special emphasis on page 14.
Turns out their compliance team had given them incorrect direction. The supervisor cured the intolerance, thanked us for the help and said they would escalate this up the chain so company policy could be corrected.
If you are in a position prepping HUD-1 forms, please make sure you have read the RESPA FAQs and don't be shy about sharing information with your lender. We always do this in a way that demonstrates we are all on a learning curve. By having discussions about compliance, using the FAQs as a guide, we have often been able to think through scenarios and work out situations together as they are discovered. We are learning from lenders and visa versa. The point is that we should be able to understand clearly what we, lenders and title insurers, are doing and why rather than just taking direction mindlessly.
Wednesday, March 31, 2010
query: is the title company the agent of the lender
Good question. If by title company you mean a title agency, the title agency is the agent for the title company/underwriter.
Title insurance companies/underwriters and their title agents have a fiduciary duty to the mortgage lender and so they do or should be keeping their eyes open for fraud and error. If the mortgage lender has requested coverage under a closing services/protection letter then the title company/underwriter and title agents have an obligation to follow the lender's written closing instructions.
Title insurance companies/underwriters and their title agents have a fiduciary duty to the mortgage lender and so they do or should be keeping their eyes open for fraud and error. If the mortgage lender has requested coverage under a closing services/protection letter then the title company/underwriter and title agents have an obligation to follow the lender's written closing instructions.
Friday, March 26, 2010
phew, I am trying to calm down.....
I haven't been this angry while writing a blog post for a long, long time. Just goes to show how much wonderful progress we have made. It's rare to run into incompetence and ignorance in the business and that's a good thing. So, let me end my blog day on the happy note. I want to express gratitude to the thousands of folks who have embraced good practices and work with their thinking caps engaged. ;)
See ya.
See ya.
Sorry, there's no better way to say this, Saxon Mortgage is an IDIOCRACY.
I have never - NEVER - NEVER - in my entire 35 year career faced an absolutely hideous mortgage servicer.
Saxon uses teams of customer service people who seem to exchange roles in and out of the payoff department - each time you call you wait forever and any prior conversation is completely erased from the company memory. Letters sent go into a black hole. Money goes into a black hole and sits there for months before any human can decide how to handle it. On the surface, the company looks like they know what they are doing. They even threaten to send money back if a payoff is inadequate but do they? Do they contact a remitter if there is a problem with a payoff -NO.
Back in November 2009 we remitted funds via wire to payoff two mortgages. One account is still in La La Land. Hideous, just hideous. Never faced anything like it. I feel sorry for consumers. Saxon is a brickwall of smiling know nothings.
Okay, so this afternoon I get a new payoff letter to see if I can figure out what is going on. We remitted via wire $18335.76 back in November and they couldn't figure out what to do with it though it was sent with the borrower name and property address and our return wire data. The account number had a typo in it. So rather than figure out which mortgage to pay off or simply return the wire to us, they sat on the money until late February when they contacted the borrower. Now, in the meantime he had not been making any payments on this account and had received NO statements or late notices -NOTHING that would indicate that there was anything wrong.
In early March the borrower contacted me and I provided evidence of the wire, we figured out what had happened with the typo and started trying to figure out how to move this account forward. A gazzillion phones calls and one certified letter to Robert Meachum, EVP at Saxon and produced NOTHING.
So, I call again today and AGAIN, after previously talking to fifteen thousand people in their customer service department we have to start over. This time, in frustration I just said send me a payoff letter.
I get the letter and see that the money they have had since November STILL hasn't been credited to this account. They just continued to accrue interest as if the money didn't exist. WHAT JERKS.
I sent in $788 in the form of a cashiers check via FEDEX out of our own pocket just to get this stupid issue resolved. Who wants to place a bet that it's not over, eh?
Saxon uses teams of customer service people who seem to exchange roles in and out of the payoff department - each time you call you wait forever and any prior conversation is completely erased from the company memory. Letters sent go into a black hole. Money goes into a black hole and sits there for months before any human can decide how to handle it. On the surface, the company looks like they know what they are doing. They even threaten to send money back if a payoff is inadequate but do they? Do they contact a remitter if there is a problem with a payoff -NO.
Back in November 2009 we remitted funds via wire to payoff two mortgages. One account is still in La La Land. Hideous, just hideous. Never faced anything like it. I feel sorry for consumers. Saxon is a brickwall of smiling know nothings.
Okay, so this afternoon I get a new payoff letter to see if I can figure out what is going on. We remitted via wire $18335.76 back in November and they couldn't figure out what to do with it though it was sent with the borrower name and property address and our return wire data. The account number had a typo in it. So rather than figure out which mortgage to pay off or simply return the wire to us, they sat on the money until late February when they contacted the borrower. Now, in the meantime he had not been making any payments on this account and had received NO statements or late notices -NOTHING that would indicate that there was anything wrong.
In early March the borrower contacted me and I provided evidence of the wire, we figured out what had happened with the typo and started trying to figure out how to move this account forward. A gazzillion phones calls and one certified letter to Robert Meachum, EVP at Saxon and produced NOTHING.
So, I call again today and AGAIN, after previously talking to fifteen thousand people in their customer service department we have to start over. This time, in frustration I just said send me a payoff letter.
I get the letter and see that the money they have had since November STILL hasn't been credited to this account. They just continued to accrue interest as if the money didn't exist. WHAT JERKS.
I sent in $788 in the form of a cashiers check via FEDEX out of our own pocket just to get this stupid issue resolved. Who wants to place a bet that it's not over, eh?
Thursday, March 25, 2010
RESPA Referral Fee Matrix
Check this out. You have to be kidding me. Is there seriously anyone out there still playing the referral fee game and thinking that regulators will give them a pass?
I found that little jewel in under this blog post:
LO’s are again asking about the RESPA rules — about when you can legally pay an affiliated party a referral fee. Dr. Gary Lacefield, RESPA Expert, has provided a RESPA REFERRAL FEE MATRIX and you can find it in the Charts & Checklist section of www.MortgageCurrentcy.com
My advice? Forget it, LO folks. Make your money the honest way. Just do your job well. Real competition and effective marketing will create winners and losers. Consumers do not need to support a referral fee network. Nobody wants to pay a higher fee for a crappy LO who can't get business any other way. Don't embarrass yourself by sinking back into corruption. You are better than that, okay?
I found that little jewel in under this blog post:
LO’s are again asking about the RESPA rules — about when you can legally pay an affiliated party a referral fee. Dr. Gary Lacefield, RESPA Expert, has provided a RESPA REFERRAL FEE MATRIX and you can find it in the Charts & Checklist section of www.MortgageCurrentcy.com
My advice? Forget it, LO folks. Make your money the honest way. Just do your job well. Real competition and effective marketing will create winners and losers. Consumers do not need to support a referral fee network. Nobody wants to pay a higher fee for a crappy LO who can't get business any other way. Don't embarrass yourself by sinking back into corruption. You are better than that, okay?
Saturday, March 20, 2010
query: how do I complete the GFE for 1st and 2nd mortgages
HUD wants you to do a separate GFE for each mortgage. Check the RESPA FAQs. There's lots of good info available in there.
query: what do you mean mortgage post closing
The word "post" means after. So any reference to post closing means after closing.
We have a post closing department which handles all of the details and work that takes place AFTER the closing. For a title insurance agent, that means recording documents, issuing policies, delivery of documents, filing, scanning, escrows and sending out checks, etc.
Mortgage lenders also have post closing departments which process the mortgages for sale in the secondary market and/or for loan servicing.
If you are a consumer and someone asks you to do something, perhaps send a document and they say, "You can send it post closing." they just mean it's okay to send it to them later, after closing.
We have a post closing department which handles all of the details and work that takes place AFTER the closing. For a title insurance agent, that means recording documents, issuing policies, delivery of documents, filing, scanning, escrows and sending out checks, etc.
Mortgage lenders also have post closing departments which process the mortgages for sale in the secondary market and/or for loan servicing.
If you are a consumer and someone asks you to do something, perhaps send a document and they say, "You can send it post closing." they just mean it's okay to send it to them later, after closing.
enjoy a title insurance blog - what? are you crazy? ;)
Diane,
Jack
Hi, Jack and thanks for reading and taking the time to comment. You are correct that life is all about risks. When the traunching of mortgage backed securities was developed, we had in place good systems of checks and balances in risk analysis and due diligence. The representations and warranties on which the system was built should have worked. It's a bit like construction. The engineering can be right but if the contractor doesn't follow the plan, cutting corners and using less than adequate materials, well then you have a disaster in the making. Good quality control programs would have stopped it all early on. Such programs were developed and mandated by FNMA, FHLMC, FHA & VA but the implementation was flawed and that was the ultimate weak link.
The industry is recovering and rediscovering good practices. It's an honorable field again. ;)
Diane
This might strike you as a bit strange, but I enjoyed visiting your blog.
Who would have thought I would visit a blog about title insurance?
I stumbled on your blog when I was researching the term "successors and assigns". I was interested in the term because I was sort of skimming through the United States Code. Right from the get go, the USC defines terms, one of which is "company". This makes a lot of sense to me as a lot of arguments have to do with definitions. Here is the page where I ran across the term "successors and assigns": http://www.law.
When I read that, I thought, what does that mean? I googled the term and found your very clear discussion of the term.
While I was at it, I read some of your observations about how big banks are in trouble with their bad loans, which in turn appears to be based on taking some shortcuts in making loans. You seem to cite the failure to do simple lien searches as contributing to the overall problem.
Of course, the financial crisis was caused by lots of specific actions, but all have one thing in common: greed blinding everyone to the risk. The perfect loan would have no risk. Sad to say, life is all about risks. So when the bankers and others in financing came up with things like credit default swaps and collaterallized debt obligations, they were just fooling themselves. A piece of paper protecting you from something bad happening is only as good as the person or company backing it. There is always a counterparty to every financial derivative. If the counterparty is corrupt or broke, so is your financial derivative.
Anyway, I enjoy your very informal and chatty way of expressing yourself.
Regards,
Hi, Jack and thanks for reading and taking the time to comment. You are correct that life is all about risks. When the traunching of mortgage backed securities was developed, we had in place good systems of checks and balances in risk analysis and due diligence. The representations and warranties on which the system was built should have worked. It's a bit like construction. The engineering can be right but if the contractor doesn't follow the plan, cutting corners and using less than adequate materials, well then you have a disaster in the making. Good quality control programs would have stopped it all early on. Such programs were developed and mandated by FNMA, FHLMC, FHA & VA but the implementation was flawed and that was the ultimate weak link.
The industry is recovering and rediscovering good practices. It's an honorable field again. ;)
Diane
First American responds to suit....
The lawsuit pits the nation’s No. 1 mortgage lender against the nation’s No. 2 title insurance company. Officials for Bank of America declined to comment on the case.
A spokeswoman for First American issued a statement expressing regret over the lawsuit, adding that the practices of an intermediary likely will be “scrutinized” as a result of the case:
First American spokeswoman Carrie Gaska said that her company expects that Fiserve’s “practices will be scrutinized in this process.”
A Fiserve spokesperson couldn’t be reached for comment.
Read more in the Orange County Register.
A spokeswoman for First American issued a statement expressing regret over the lawsuit, adding that the practices of an intermediary likely will be “scrutinized” as a result of the case:
“United General Title Insurance Company and First American Title Insurance Company regret that their valuable customer, Bank of America, has chosen to file a legal action against the companies. However, we are hopeful that we will be able to resolve this matter outside of court with continued discussions.”The title policies were issued under the QuickClose LPI Program administered by Fiserve Solutions Inc.
First American spokeswoman Carrie Gaska said that her company expects that Fiserve’s “practices will be scrutinized in this process.”
A Fiserve spokesperson couldn’t be reached for comment.
Read more in the Orange County Register.
Friday, March 19, 2010
well, well, well......crappy title underwriting comes home to roost
Now Bank of America Corp., the nation's biggest mortgage lender, is saying the nation's second-largest title insurer did much the same thing and should be on the hook for more than $500 million in losses.
In a lawsuit filed earlier this month, BofA alleged that First American Corp. in Santa Ana relied on home buyers to tell them about liens on their properties and other matters, rather than conducting traditional title searches.
The shortcut was part of a program called QuickClose that BofA said in its suit did not require "title searches in connection with loans processed under the program."
Read more in the LA Times.
In a lawsuit filed earlier this month, BofA alleged that First American Corp. in Santa Ana relied on home buyers to tell them about liens on their properties and other matters, rather than conducting traditional title searches.
The shortcut was part of a program called QuickClose that BofA said in its suit did not require "title searches in connection with loans processed under the program."
Read more in the LA Times.
Wednesday, March 17, 2010
This is fascinating...I'm sure there's more to this story.
Bank of America, one of America's largest mortgage lenders and the recipient of more than $45 billion in TARP funds from the federal government, claims that United General Title Insurance and First American Title Insurance, now corporate affiliates, insured mortgages for title defects, undisclosed intervening liens and other problems, and to cover equity loans and lines of credit up to $500,000.
Now the insurers are balking at paying the claims, blaming Bank of America and the firms it acquired prior to the global economic crisis for creating their own problems, BofA says in Mecklenburg County Court.
As of February the two insurers have denied at least 2,200 of Bank of America's claims, representing more than $235 million in losses, and failed to respond to another 2,300 claims, representing more than $300 million in losses, BofA says.
All of the claims arise from a home equity loan or line of credit that is in default, the bank says.
Read more in Courthouse News.
Now the insurers are balking at paying the claims, blaming Bank of America and the firms it acquired prior to the global economic crisis for creating their own problems, BofA says in Mecklenburg County Court.
As of February the two insurers have denied at least 2,200 of Bank of America's claims, representing more than $235 million in losses, and failed to respond to another 2,300 claims, representing more than $300 million in losses, BofA says.
All of the claims arise from a home equity loan or line of credit that is in default, the bank says.
Read more in Courthouse News.
Wednesday, March 10, 2010
HELOC/open end payoff, satisfaction, reconveyance.....
When you find an "open end" or line of credit/HELOC mortgage on record in a title search, you really need proceed carefully. Most important is to freeze the account when you get your payoff letter. You need to stop the moving money target. There are some lenders who refuse to put a freeze on these accounts so your post closing payoff procedure can include a few extra steps to eliminate risk. Here are some tips:
- Add language to the mortgage payoff clause in Schedule B1. This is what we use: NOTE: This is an open line of credit. The account holder must contact this mortgage lender and request that they freeze the credit line in anticipation of payoff, closure, and satisfaction.
- Have the mortgagor sign a statement requesting that the account be closed and satisfied. If the lender does not include this type of statement in the payoff letter, create one yourself. It is okay to keep it simple and I believe it is best to write it on the payoff letter. We just legibly handwrite "Please close and satisfy." We have the mortgagor sign this which does two things for us. It give us an acknowledgment that the mortgagor is aware of the payoff and has agreed that the account should be closed and satisfied. This eliminates any confusion over whether they can still use the account after closing and before the payoff is posted. It also gives them a chance to tell you if they have drawn additional funds after the payoff letter was issued.
- Send the payoff letter and funds to the lender rather than processing the payoff by wire. We sometimes have trouble in our office remembering this step. We are so used to doing payoffs by wire that sometimes an open end account slips through. If you wire, the lender won't get that "Please close and satisfy." statement which I believe is most effective when received by the lender with the funds.
Tuesday, March 09, 2010
call is over.....
I thought it was very helpful. The answer to my question is that I can opt to use Table B which I will do.
BTW - That "mouthy broad" was NOT me. LOL
Favorite comment - "I agree with the dog." ;)
BTW - That "mouthy broad" was NOT me. LOL
Favorite comment - "I agree with the dog." ;)
PA Data Call conference call this morning.......
My question:
Please comment on the section concerning the various discounted rates. I do not understand the limited categories of BASIC and REISSUE for short form policies.
It seems to me that the question of whether a long or short form was used is not related to the rate charged to the consumer. For instance, in PA the most popular Community Reinvestment Act program is a Pennsylvania Housing Finance Agency mortgage. ALL PHFA transactions are eligible for the Community Reinvestment Act rate which is 75% of basic, a deeper discount than reissue which is 90% of basic. PHFA requires that we use the ALTA short form, therefore all PHFA policies would not be included in the study data as having been properly discounted for the consumer. Does this make sense?
[FYI The extra charge of $100 for a short form is offset by the inclusion of the 100 & 300 endorsement coverage which runs $100 extra when using a long form.]
Please comment on the section concerning the various discounted rates. I do not understand the limited categories of BASIC and REISSUE for short form policies.
It seems to me that the question of whether a long or short form was used is not related to the rate charged to the consumer. For instance, in PA the most popular Community Reinvestment Act program is a Pennsylvania Housing Finance Agency mortgage. ALL PHFA transactions are eligible for the Community Reinvestment Act rate which is 75% of basic, a deeper discount than reissue which is 90% of basic. PHFA requires that we use the ALTA short form, therefore all PHFA policies would not be included in the study data as having been properly discounted for the consumer. Does this make sense?
[FYI The extra charge of $100 for a short form is offset by the inclusion of the 100 & 300 endorsement coverage which runs $100 extra when using a long form.]
Friday, March 05, 2010
RESPA 2010 - just where do you put the NOTARY or SIGNING SERVICE on the new GFE?
Simple......... in title services.
Thursday, March 04, 2010
RESPA 2010 - purchase with a 1st and 2nd mortgage
We are getting ready to close our first simultaneous 1st and 2nd under the new rules. Our buyer is getting a line of credit 2nd mortgage and as far as I know, drawing the whole line now for closing.
When we got the title order, we checked the RESPA FAQ and saw on page seven that there should be TWO GFEs and TWO HUD-1 forms. We asked the lender for both GFEs and held back delivery of the title commitment because we couldn't get a GFE on the second.
I did some more research and found that the RESPA final rule does have an exception for a line of credit. The lender can opt to not do a GFE and instead provide the consumer with the appropriate disclosures under Reg Z. I then asked for the Reg Z disclosure.
After a series of requests including chatting with a supervisor in the home equity department, I was given what they said was the full disclosure pack that had been given to the consumer. I looked at every page and couldn't find anything resembling the Reg Z disclosure.
I decided to move the transaction forward by releasing the title commitment and producing both prelim HUDs. Note that I could not input any GFE data for the 2nd - the line of credit, so I wasn't able to do any test comparison.
I then sent an e-mail inquiry to HUD and got a prompt response that the issue had been covered in the FAQ and we needed TWO GFEs and TWO HUDs. I replied that I seem to be having a problem because the lender isn't doing a GFE because the mortgage is a line of credit and that the final rule appears to allow that opting out. How, I asked does the settlement agent complete a HUD-1A and do a GFE comparison without having a GFE? I am awaiting a response on that question and will post back here when received either directly or through updated FAQs.
After submitting the prelim HUD-1A to the home equity department I received a response saying they didn't want title insurance on the 2nd and they wanted me to remove the title services charge. I replied that I didn't charge for title insurance on the second but our other related fees are in that figure.
This morning I received another reply asking then if I intended that figure to be a settlement fee and I responded that under RESPA 2010 rules I had to lump all my charges into that one figure and I gave her the breakdown which had been provided with the prelim.
Here's the reason for my post. How is it that this subject hasn't come up before? This is March!
PS - Some may wonder why we are charging anything to close the 2nd. Our decision to charge or not is based upon the amount of extra work.
We have two local banks for whom we close line of credit seconds for no extra charge because there is little paperwork, no draw/disbursements, and all we have to do is have a couple of extra docs signed and record the second. Docs are provided by the banks and they are delivered back with the 1st package to the same department. We'll see if this changes under the new rules.
When we have a 2nd closing with a large doc pack, separate set of instructions, working with a draw/disbursement - delivering and dealing with a different lender or a different department, we charge for those extra services because we are doing double the work - so two incoming wire fees, two couriers, two edoc printing and two settlement fees.
When we got the title order, we checked the RESPA FAQ and saw on page seven that there should be TWO GFEs and TWO HUD-1 forms. We asked the lender for both GFEs and held back delivery of the title commitment because we couldn't get a GFE on the second.
I did some more research and found that the RESPA final rule does have an exception for a line of credit. The lender can opt to not do a GFE and instead provide the consumer with the appropriate disclosures under Reg Z. I then asked for the Reg Z disclosure.
After a series of requests including chatting with a supervisor in the home equity department, I was given what they said was the full disclosure pack that had been given to the consumer. I looked at every page and couldn't find anything resembling the Reg Z disclosure.
I decided to move the transaction forward by releasing the title commitment and producing both prelim HUDs. Note that I could not input any GFE data for the 2nd - the line of credit, so I wasn't able to do any test comparison.
I then sent an e-mail inquiry to HUD and got a prompt response that the issue had been covered in the FAQ and we needed TWO GFEs and TWO HUDs. I replied that I seem to be having a problem because the lender isn't doing a GFE because the mortgage is a line of credit and that the final rule appears to allow that opting out. How, I asked does the settlement agent complete a HUD-1A and do a GFE comparison without having a GFE? I am awaiting a response on that question and will post back here when received either directly or through updated FAQs.
After submitting the prelim HUD-1A to the home equity department I received a response saying they didn't want title insurance on the 2nd and they wanted me to remove the title services charge. I replied that I didn't charge for title insurance on the second but our other related fees are in that figure.
This morning I received another reply asking then if I intended that figure to be a settlement fee and I responded that under RESPA 2010 rules I had to lump all my charges into that one figure and I gave her the breakdown which had been provided with the prelim.
Here's the reason for my post. How is it that this subject hasn't come up before? This is March!
PS - Some may wonder why we are charging anything to close the 2nd. Our decision to charge or not is based upon the amount of extra work.
We have two local banks for whom we close line of credit seconds for no extra charge because there is little paperwork, no draw/disbursements, and all we have to do is have a couple of extra docs signed and record the second. Docs are provided by the banks and they are delivered back with the 1st package to the same department. We'll see if this changes under the new rules.
When we have a 2nd closing with a large doc pack, separate set of instructions, working with a draw/disbursement - delivering and dealing with a different lender or a different department, we charge for those extra services because we are doing double the work - so two incoming wire fees, two couriers, two edoc printing and two settlement fees.
Wednesday, March 03, 2010
pre-qualification versus pre-approval
The new mortgage disclosure rule is upending the first step in the process of lending to homebuyers.
Before shopping for a property, a prospective buyer typically gets a preapproval letter from a lender indicating how big a loan the person qualifies for. Real estate agents often ask for these letters so they can make sure the customer can afford the property before showing it. Read more here.
LOL Sometimes I feel ancient. I guess that's what happens when you've been in business longer than most of the other people in it. Real estate agents used to be able to do simple pre-qualification formulas. Loan originators helped. No one expected a pre-approval letter. As long as a real estate agent takes the time to ask the right questions, then they won't be wasting their time showing property to unqualified buyers.
Frankly, I have always viewed the "pre-approval" letters as a marketing tool. If the borrower gets one from a lender, they are most likely to go back to that lender for the loan. Pre-approval letters are the first step of the steering process. It's a pretty solid way to eliminate competition.
I think HUD is correct in their course of relieving borrowers of heavy pre-application document tasks. If you make each conversation with a lender too burdensome, then borrowers won't shop around.
The whole POINT of this new RESPA rule is to ENCOURAGE shopping.
So far, I think things are moving forward rather smoothly under the new rules. I do hope HUD stays the course. Good job, HUD.
Before shopping for a property, a prospective buyer typically gets a preapproval letter from a lender indicating how big a loan the person qualifies for. Real estate agents often ask for these letters so they can make sure the customer can afford the property before showing it. Read more here.
LOL Sometimes I feel ancient. I guess that's what happens when you've been in business longer than most of the other people in it. Real estate agents used to be able to do simple pre-qualification formulas. Loan originators helped. No one expected a pre-approval letter. As long as a real estate agent takes the time to ask the right questions, then they won't be wasting their time showing property to unqualified buyers.
Frankly, I have always viewed the "pre-approval" letters as a marketing tool. If the borrower gets one from a lender, they are most likely to go back to that lender for the loan. Pre-approval letters are the first step of the steering process. It's a pretty solid way to eliminate competition.
I think HUD is correct in their course of relieving borrowers of heavy pre-application document tasks. If you make each conversation with a lender too burdensome, then borrowers won't shop around.
The whole POINT of this new RESPA rule is to ENCOURAGE shopping.
So far, I think things are moving forward rather smoothly under the new rules. I do hope HUD stays the course. Good job, HUD.
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